- Standing Committee A

[Mr. Roger Gale in the Chair]

National Lottery Bill

Clause 14 - Functions

Amendment proposed this day: No. 46, in clause 14, page 8, line 13, leave out
‘comply with any direction given to it’
and insert
‘have regard to any guidance made’.—[Mr. Swire.]

Roger Gale: I remind the Committee that with this we are discussing the following amendments: No. 47, in clause 14, page 8, line 16, leave out ‘A direction’ and insert ‘guidance’.
No. 48, in clause 14, page 8, line 17, leave out ‘specify’ and insert ‘suggest’.
No. 49, in clause 14, page 8, line 19, leave out ‘specify’ and insert ‘suggest’.
No. 50, in clause 14, page 8, line 24, leave out ‘A direction’ and insert ‘guidance’.
No. 52, in clause 14, page 8, line 39, leave out ‘A direction’ and insert ‘guidance’.
No. 73, in clause 18, page 11, line 13, leave out subsections (2) and (3).

Question again proposed, That the amendment be made.

Roger Gale: At the end of this morning’s sitting Mr. Swire had the Floor, but I understand that he had taken an intervention from Mr. Turner.

Hugo Swire: I am happy to give way again to my hon. Friend the Member for Isle of Wight (Mr. Turner).

Andrew Turner: Let me complete the sentence that I was in the middle of when we adjourned. Is the Minister giving those assurances on behalf of the bodies listed in new section 36E(4)?

Hugo Swire: That question would be better addressed to the Minister than to me.

Andrew Turner: I am grateful to my hon. Friend for that answer, but my question is a rhetorical one. The Minister has given assurances on his own behalf and he is unlikely to speak again on the amendment, but I am not clear whether his assurances, which are of some significance to our interpretation of the Government’s intentions, apply similarly when the powers are exercised by the bodies listed in subsection (4).

Hugo Swire: My hon. Friend, in his customary way, makes an extremely good point.
We listened to what the Minister had to say on the subject and I return to the point that we are charged with making legislation that stands the test of time. Regardless of the present Secretary of State’s intentions on whether to use the powers, we must see the legislation as a very different Secretary of State might see it. We have already heard that the Community Fund did not have the powers that will be vested in the Big Lottery Fund. The Minister tried to sell that as a piece of housekeeping, arguing that by wrapping up the New Opportunities Fund and the Millennium Commission into the Big Lottery Fund, it could assume those powers. There is definitely an increase in the powers of the Secretary of State.
As has been the case throughout these deliberations, we are being asked to take a lot on trust. I am happy to take a certain amount on trust, but it is my job to ensure that the Bill can stand up to close examination. I return to the law of unintended consequences: in the hands of someone less honourable than the current Secretary of State, the whole process of control could be ratcheted up, severely restricting the controls, freedom and flexibility of the distributors, which the Minister argues he is keen on.
I thought at the beginning of the Minister’s response to the hon. Member for Bath (Mr. Foster) that he was nodding his assent—indeed, his head was nodding so vigorously that he reminded me of one of those dogs on the back shelf of a car. Given his other hat as the Minister for Sport, it was probably an old sports injury rather than an indication of assent. As is always the case, I was prepared to listen to the right hon. Gentleman, who was no doubt going to either give a reasonable explanation of why the Bill should be kept as it is, or concede ground to us. I believe neither to be the case, so I have no option but to press the amendment to a Division.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 9.

NOES

Question accordingly negatived.

Hugo Swire: I beg to move amendment No. 53, in clause 14, page 8, leave out lines 25 and 26.

Roger Gale: With this it will be convenient to discuss the following amendments: No. 59, in clause 14, page 8, line 35, leave out
‘obtain the Secretary of State’s consent’
and insert
‘consult the Secretary of State’.
No. 54, in clause 14, page 8, line 38, at end insert—
‘(3A)A direction under this section may not relate to the management and control of money received by the Fund.’.
No. 64, in clause 14, page 9, line 16, leave out ‘consult’ and insert ‘obtain the consent of’.
No. 65, in clause 14, page 9, line 17, leave out ‘obtain the consent of’ and insert ‘consult’.

Hugo Swire: These amendments cover similar territory to the amendments to the powers of direction that we have just debated and the amendments to the powers of prescription in clause 7 that we debated long and hard the day before yesterday.
Amendment No. 53 would remove the Secretary of State’s ability to direct the management and control of money received by the fund. Amendment No. 59 would remove the power of the Secretary of State to demand the Big Lottery Fund’s consent on various matters in her direction. Amendment Nos. 54 and 64 suggest that the Secretary of State should obtain the consent of the Big Lottery Fund before giving a direction. I do not suppose that that will be greeted with any great enthusiasm by the Minister. Lot 65—sorry, I thought for a moment that I was doing a charity auction. I have made that mistake before. Mind you, Mr. Gale, the amendments are not for sale. Amendment No. 65 is similar to the preceding amendment.
The Opposition are being consistent in our attempts to weaken the ability of the Secretary of State to direct where the money can go, and certainly to remove the Secretary of State’s ability to direct the management and control of the money received by the fund. We suggest in our amendments that the requirement should be to consult the Secretary of State, rather than to obtain his or her consent.

Andrew Turner: I do not intend to repeat the arguments that I advanced in relation to the previous group of amendments, but I should like to put to the Secretary of State a question relating to the assurances that he gave in the House and that we have heard repeated in Committee about the use to which he intends to put the directions. It is the question that I asked in my intervention on my hon. Friend the Member for East Devon (Mr. Swire) during debate on the previous group of amendments.
What is the status of the Secretary of State’s assurances in relation to those bodies that are mentioned in subsection (4) of new section 36E of the National Lottery etc. Act 1993? We are legislating not only for England, but for the United Kingdom. It is proposed to hand powers that in England are exercised by the Secretary of State, with the assurances that he has given us, to devolved bodies and in some cases to Ministers in devolved bodies without any clear set of assurances. What discussions has the Secretary of State had and what assurances has he been given by the devolved bodies mentioned in subsection (4) that the assurances that he has given to us apply equally in respect of those bodies?

Richard Caborn: I wish the hon. Gentleman would not elevate me to greater office than that to which I have risen. I am a Minister of State, not a Secretary of State.

Hugo Swire: And a Privy Councillor.

Richard Caborn: Indeed, but I am still a Minister of State—a paid one.
The amendments all relate to the directions that will be issued to the Big Lottery Fund under new section 36E(3)(a) of the 1993 Act, which is inserted by clause 14 of the Bill. Amendments Nos. 53, 54 and 59 relate to the financial directions that the Secretary of State will issue to the Big Lottery Fund. Amendment No. 53 would delete new section 36E(3)(a), which provides that directions issued to the fund may relate to the management and control of money received by the fund. Amendment No. 54 would go further, adding a new subsection to section 36E stating explicitly that directions to the fund may not relate to such matters. Amendment No. 59 would require the Big Lottery Fund to consult the Secretary of State rather than seek her consent before taking actions of a specified kind.
I hope that the hon. Member for East Devon will forgive me if I say that I am somewhat confused by the amendments. Under section 21 of the 1993 Act, the Secretary of State is responsible for the control and management of the national lottery distribution fund. That is why under section 26 of the 1993 Act all lottery distributors are required to comply with any directions that she considers appropriate for securing the proper management and control of money paid to the body.
The financial directions will incorporate financial controls similar to those that apply to all non-departmental public bodies, so they are financial memorandums. They may require a distributor to obtain the consent of the Secretary of State before doing anything specified, or of a description specified, in the directions. The requirements in section 26 of the 1993 Act are exactly the same as those placed on the Big Lottery Fund by new section 36E(3)(a) and (d)(ii). For example, existing financial directions require distributors to seek approval for the controlling systems that they maintain to prevent and detect fraud.
I see no reason why the Big Lottery Fund should be treated differently from any other lottery distributor. After all, as I said before, the Secretary of State must be able to protect public money by ensuring that all distributors comply with basic financial and operational good practice. As she cannot devolve her accountability to Parliament, it is essential that she alone has the power to issue financial directions to ensure consistency across the UK. I am sure that the hon. Gentleman does not disagree and I ask him not to press the amendments.
Amendments Nos. 64 and 65 would provide that before directions are given about Scotland, Wales or Northern Ireland devolved expenditure, the devolved Administrations must obtain the consent of the Big Lottery Fund and consult the Secretary of State. As the Bill stands, they must consult the fund and obtain the consent of the Secretary of State. The Bill represents a significant devolution of power to  Scotland, Wales and Northern Ireland. Country committees will exercise the fund’s functions in respect of Scotland, Wales and Northern Ireland expenditure, operating under policy directions issued by the relevant country, but there must be a balance between devolution and the proper management of what remains a UK-wide lottery. It is therefore right that directions should be issued by the devolved Administrations only with the consent of the Secretary of State.

Adam Afriyie: New section 36E(3)(a) states:
“A direction under this section may... relate to the management and control of money received by the Fund”.
Three separate entities are being amalgamated into the Big Lottery Fund. Does the new section increase the Secretary of State’s power over any of the existing funds?

Richard Caborn: No. We are taking exactly the same approach. Such provision is not just about lottery funds; it is about the financial management of NDPBs across the board. That is a fairly standard format to ensure accountability to Parliament through the Secretary of State. There are two routes of accountability: via the chief executive of the Big Lottery Fund, as he is the accounting officer and accountable to Parliament through the Public Accounts Committee and the National Audit Office; and directly to Parliament through the Secretary of State—we are dealing with the financial powers of the Secretary of State.
Obtaining the consent of the fund is not a requirement in any of the directions issued to the Big Lottery Fund or to the other funds in existing legislation. I cannot see any reason to make a special case here. In the light of my explanation, I hope that the hon. Member for East Devon will withdraw the amendment.

Hugo Swire: I have listened hard to the Minister and take on board the points he made about amendments Nos. 53, 59 and 54, but I am concerned that he has not answered the points raised on amendment No. 64. I will not press amendments No. 53, 59, 54 and 65, but I shall seek a Division on amendment No. 64.
I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: No. 64, in clause 14, page 9, line 16, leave out ‘consult’ and insert ‘obtain the consent of’.—[Mr. Swire.]

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 10.

NOES

Question accordingly negatived.
The Chairman, beingof the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill:—

The Committee divided: Ayes 10, Noes 6.

NOES

Question accordingly agreed to.

Clause 14 ordered to stand part of the Bill.

Richard Caborn: On a point of order, Mr. Gale. There have been some doubts about a quotation in Hansard and perhaps it would be appropriate for me to respond to the question raised by the hon. Member for East Devon this morning. I had not then had time to read Hansard, but I would like to refer to the question raised about appointments made by my right hon. Friend the Secretary of State—

Roger Gale: Order. I understand the Minister’s request, but I have to tell him that he would be out of order were to do that. It is of course perfectly open to the Minister to write to the hon. Gentleman and to place his opinion on the record in that way, but he cannot do it here and now.

Clause 8 - Reallocation of funds

Don Foster: I beg to move amendment No. 98, in clause 8, page 5, leave out lines 13 to 15 and insert—
‘(2)In exercising his duties under section 33 (3), the Comptroller and Auditor General may make recommendations to the Secretary of State regarding the desirability of making an  order to provide for the money to be held for distribution by a different body specified in section 23 (without altering the purpose for which the money is allocated).’.

Roger Gale: With this it will be convenient to discuss Government amendments Nos. 5 and 6.

Don Foster: Welcome back to the Chair, Mr. Gale. For those following our proceedings, in an odd but nonetheless perfectly logical order, we move from clause 14 to clause 8.
This is a highly controversial clause, whereby the Secretary of State will take upon herself a range of powers. If she does not like one distribution body and does not believe that it is doing enough to reduce its balances, she will be able to take away its money and give it to another distribution body.
Somewhat surprisingly, I speak to my own amendment with a degree of reluctance. It is somewhat wimpish. Were I to have felt gung-ho and bold, I would have proposed the deletion of all the powers. Knowing that the Minister would not accede to that, however, I thought that it would be more helpful to table a watered-down amendment for the Committee’s and the Minister’s consideration.
The amendment is so watered down that I can see no justification whatever for the Minister to refuse it. It says that if the Secretary of State is to use those draconian powers, which I am uncomfortable with her taking, it should be at least with the advice of an external body.
The Committee will be aware of the explanatory notes as well as the Bill. The notes say about the power:
“In practice, the Secretary of State would only use this as a last resort in the event that a distributor was considered to have failed, signally, to reduce balances to a reasonable level and there were serious concerns about the ability of a distributor to act economically and effectively.”
We have it on record that the provision will be an absolute last resort, and the Minister will no doubt repeat that. Nevertheless, it is clear from the notes that the Secretary of State will judge whether the distribution body has failed to reduce its balances. It will be her judgment whether the body is at fault, for reasons that she will determine.
My amendment simply says, “For heaven’s sake, we have a body that constantly reports on the lottery and matters of balances, namely, the National Audit Office.” The Minister will shortly refer to the most recent report from the National Audit Office to give succour and support to what he seeks to do, so he will acknowledge that it has a vital role to play. I merely suggest that some advice should be sought from the National Audit Office before the Secretary of State uses those powers.
Given the nature of the clause and the amendments, the debate will understandably be widened to include the question of the balances more generally and whether there is a serious problem with them. The Minister will no doubt say in a few minutes that money must be transferred as quickly as possible to projects and that it should not sit in distributor bank accounts any longer than necessary. I accept that, but I do not  accept that increased political interference under the proposed legislation is the way to deal with a perceived problem.

Roger Gale: Order. The hon. Gentleman is stretching a little bit wide of his amendment. He has been sitting on Committees long enough to know my custom. I am perfectly happy to have the stand part debate at the start of the debate on the clause, rather than at the end, but I do not want to have it twice. If he wishes to broaden his remarks, he may, but that is on the strict understanding that we shall not repeat the stand part debate.

Don Foster: I am most grateful, and I will obviously abide by your ruling. The proposal is that the Secretary of State be given the power to hand over money in circumstances in which distributors have not got rid of their balances in a sufficiently timely manner. I was just about to make the point that, without the powers that the Minister seeks, there has already been significant movement in that regard. The Minister will remind us that, in 1999, the balances stood at £3.7 billion, but by May this year they were down to £2.4 billion. That significant reduction has taken place without the need for the type of action that the Minister proposes in the clause. The power in the clause will be increased by the two Government amendments in the group.
The additional powers are potentially unnecessary, given the successful reduction. My amendment mentions the NAO because there is a real issue about how rapidly and to what extent we want to reduce balances. The NAO, which is the body that I want to involve in making the decisions, addressed this matter in last year’s report, “Managing National Lottery Distribution Fund balances”. I accept that there is a more recent report, which the Minister referred to, but this one states:
“The build up of balances at the start of the National Lottery reflected the... time lag between money being paid into the National Lottery Distribution Fund and it being awarded to and drawn down by grant recipients... The current level of balances is therefore the result of the low rate of drawdown compared to income in the first four years of the Lottery.”
Critically, it continues:
“There can be a significant gap between a grant being awarded and the project starting to incur expenditure and draw down funds.”
The Heritage Lottery Fund, for example, reports that its largest grants—those of more than £5 million—are paid out on average over four years and two months, although some take as long as eight years. The HLF may well be in a position where it has allocated the money, but has not yet given it out. It reported in a brief that I think that all Members of the House received that, far from its balances being underspent, as was implied, it was actually overcommitted in terms of its planned expenditure by £175 million.

Hugo Swire: The hon. Gentleman is right that the heritage sector is concerned about these and subsequent amendments. Does he agree that if pressure of this sort was applied to the HLF, it could result in an acceleration of allocations and grants and in the money being drawn down in a way that might be unwise given the complicated nature of many of the  funding programmes that the HLF undertakes, and that it would lead to less control, rather than better control, being exercised over the money being spent?

Don Foster: The hon. Gentleman is right; I agree with every word that he has said. That is why we need to treat with caution the powers that the Secretary of State wishes to take on herself. At least, there is a need to include some additional counterbalance to what the Secretary of State might be thinking. When the reallocation of funds is mentioned in the Bill and the explanatory notes, there is no mention of the NAO, yet it has a great deal of expertise in this field, as demonstrated by its numerous reports on the matter—reports that are prayed in aid when making the decision to go ahead with the new powers given to the Secretary of State in the clause.
I am genuinely fearful that indiscriminate reallocation of funds would cause huge problems. There is no doubt that if that happened it is quite likely that a new distribution body would be set up. I have no doubt that if the Government were to do that, the body would have all the powers imposed on it that they are imposing on the Big Lottery Fund. In many cases—not always—a new body would have to be set up, and that could create a problem.
However, there is a further problem. If the money is to be transferred to a new distributing body, or just another one, there would be concern that some of the commitments already made by the old distributing body would not be carried forward. If the Minister does nothing else in responding to the amendment, will he give the following categorical assurance? If funds are to be transferred from one distributing body to another, all the undertakings and commitments given by the original distributing body should also be transferred to it.

Hugo Swire: Will the hon. Gentleman take this opportunity to put on record what a good job the Heritage Lottery Fund has done in rejuvenating our heritage in all parts of the kingdom? Can he think of any organisation that could be set up which could do the job as well as the HLF does?

Don Foster: I accept everything that the hon. Gentleman says. Like him, I am a huge fan of the HLF, the work that it does, the efficiency with which it does it, its increasing involvement of members of the public in making decisions and the innovative projects that it has supported. I have no reason to believe that the HLF would fall foul of the powers that the Secretary of State seeks to introduce. I am prepared to acknowledge that Governments and Ministers come and go, that the people in the HLF may change. My very limited amendment would not take away the powers from the Secretary of State, but would merely place checks and balances around their use.

Hugo Swire: On that very point, the hon. Gentleman will recall in an earlier part of our deliberations that the Minister confirmed that heritage would be part of  the funding stream beyond 2009. The Minister was careful not to say that the distributor for those funds would be—as things stand—the Heritage Lottery Fund. Does the hon. Member for Bath share a residual nervousness that the Government have other plans?

Don Foster: I hope that the Minister will not be too offended by my remarks. I wish that he had given us a clear commitment that the Heritage Lottery Fund would remain for all time as we know and love it. However, I am not sure how much faith I have in the Minister’s comments in view of the fact that he made other commitments, for example on the Floor of the House on Monday relating to powers taken by the Secretary of State, which have been demonstrated not to match the understanding that the rest of us had. I am a generous man, which is shown in the way I have phrased my remarks, and no doubt the Minister will have noticed that.
There is concern about ensuring continuity of funding. I am delighted that the Minister is already nodding, showing that he will give me those assurances. The National Campaign for the Arts is one of many bodies that have written to me on this issue. It pointed out in its briefing the day before yesterday that
“it is crucial for organisations to know that when money is committed it will be delivered”.
That is clearly a concern felt by many people. Our amendment would give distributing bodies, including the NLF and others confidence that those powers will not be used at the whim of the Secretary of State, but will be used on the advice of the body that knows about such matters—the NAO. Various bodies have sought to persuade me to go further. The National Council for Voluntary Organisations is opposed to what the Government plan to do. In its briefing less than a week ago, it said:
“In effect (this clause) gives the Government licence to raid lottery funds.”
I have some sympathy with that. The chief executive of the National Association of Councils for Voluntary Service, Kevin Curley, states:
“I’m nothing short of astonished at the audacity of the Government. This fundamentally undermines the trust between the voluntary and community sector and the Government.”
There are deep concerns about this clause. I have said that I am not happy with it and that I share the concerns of others. Rather than go the whole hog and say, “Let’s get rid of it”—the Minister will not accept that—I have come forward with what we might describe as the third way. It is a real solution for the Minister, who believes in the importance of consultation and of all those other bodies having a say. I propose that the Secretary of State can have her powers, subject to her receiving advice from the NAO and the Comptroller and Auditor General that the measure is a sensible one to take. In the light of that, I can see no reason why the Secretary of State, and the Minister, representing her, should not accept the amendment.

Tom Harris: I have some sympathy with the argument made eloquently by the hon. Member for Bath. His reference to the third way almost sealed the deal, as far as my support for his  amendment is concerned. The underlying and most persuasive argument that he made is that all those projects desperately need security and continuity of funding. They never had that before the setting up of the Heritage Lottery Fund. They have quite rightly come to rely on it and it must not be undermined.
I speak as a Member for a constituency where the Heritage Lottery Fund has played a major part in the past few months. The Castlemilk stables restoration has benefited to the sum of more than £330,000 thanks in very small part to my own lobbying. The project has been many years in the planning, and even though the announcement of the grant was made at the beginning of this year, it is not expected that the capital works will proceed for a number of years.
However, a commitment to that grant has been made, and given that it is a project many years in the making, I should be very unhappy, as would many people in my constituency and in Glasgow as a whole, if anything said in this Committee or included in legislation were to undermine the security of its funding.
I understand why the Government dislike the notion of unused balances of many millions of pounds in any bank account held by a body such as the HLF; however, I am simply looking for a reassurance that the hard work already committed to a project such as the Castlemilk stables will not be wasted. I am sure that the Minister appreciates that, because he will get the same message from other members of the Committee.
When the HLF was founded, there was an inevitable time lag between the money entering and starting to leave the fund. It was an inevitable consequence of the organisation’s structure. The first applications took some time to assess and the work took some time to start. As a result there was a build-up of money at the beginning of the lottery, and it has taken some time to come down.
The fund mainly finances medium and large capital projects, and by their very nature they take a long time to get under way. The money that the fund awards them can sit in the bank for several years. I understand why the Government are not happy with that situation, but the hon. Member for East Devon made a telling point. He said that we did not want pressure to fall on the HLF to farm out those grants earlier than might be appropriate. I hope that the Minister will reassure us about that, because in many cases the money would simply be wasted. Surely it would be better to have it sitting in a bank, earning interest, than to give it to a project before it can be properly used.
I hope that the Minister will be able to reassure me that projects such as Castlemilk stables will not be sidelined, delayed or even shelved because of the clause. I look forward to his comments.

Hugo Swire: I am more than happy to support amendment No. 98, and I thank the hon. Member for Bath for his explanation of it. If we are to allow the Secretary of State the ability to move lottery balances around on a whim, which is in effect what the clause does, it is appropriate that the Comptroller and Auditor General be allowed to give her advice. The  National Audit Office has proved itself adept at examining lottery fund balances in a forensic and impartial light. I would go a little further than the amendment and require any such advice to be published if an order is made, but I am sure that the NAO would happily make such information available.
I want to deal mainly with the Government amendments, Nos. 5 and 6. I hope that the Minister will seriously consider our views on these amendments and on clause 8 as a whole, for I genuinely believe that he is committing a grave error. I hope that in a spirit of non-partisanship he will register the concern, if not disquiet, voiced by the hon. Member for Glasgow, South (Mr. Harris) and Opposition Members. I offer my comments as constructive criticism.
It is a fact that neither the NAO nor the Culture, Media and Sport Committee supports the Government’s aims in clause 8, and it goes without saying that the powers in clause 8 are viewed with dread by lottery distributors. Throughout the Bill, the Government have claimed again and again to be doing what the public want and have often prayed in aid their famous consultation process, but of those in that same consultation who expressed an opinion on this power of redistribution, 42 were against and only nine were in favour. It is clear that the public do not want a power of redistribution. I invite the Minister specifically to address that issue.
Let us be frank and concede what we all know. The unspoken truth is that the clause is directed at the Heritage Lottery Fund. I agree that, ideally, high balances in the national lottery distribution fund should be brought down, but I do not agree with the draconian powers in the clause. I have considerable sympathy with the Heritage Lottery Fund, and that sympathy is shared by the hon. Members for Glasgow, South and for Bath. Unlike other distributors, it funds long-term projects. Some of them, as we heard in the example of Castlemilk stables, take years to complete.
Funding is properly allocated and then paid out in tranches rather than all at once at the beginning of the project. It is important, if control is to be retained over long-term projects, not to accelerate distribution for the sake of getting the balances down, but it is equally important that not all the money be paid up front, as once the money is paid over, it is difficult to have any control over the project if it starts going wrong.
The central fact is that the Heritage Lottery Fund’s balance is entirely made up of committed money. I challenge the Minister on this. Committed money is spent money by any other name; it cannot be spent twice. However, there is a further problem, in that there was a discrepancy at the outset of the national lottery between funds coming in and commitments being met. As last year’s NAO report “Managing National Lottery Distribution Fund Balances” makes clear,
“the build up of balances at the start of the National Lottery reflected the inevitable time lag between money being paid into the National Lottery Distribution Fund and it being awarded and drawn down by grant recipients”.
From a sedentary position the Minister said, “What is he talking about?” Presumably he was referring to me, but I was referring to paragraph 2.3 on page 13 of the  NAO’s report. So, it is not what I am talking about that is important; it is what the NAO is saying. I think that he would agree that it is a fairly important and independent body.
Paragraph 2.3 states:
“The current level of balances is therefore the result of the low rate of drawdown compared to income in the first four years of the Lottery.”
In addition, the NAO reports, in paragraph 2.4, that
“there can be a significant gap between a grant being awarded and the project starting to incur expenditure and draw down funds.”
The HLF, one of the distributors with the largest balance, reports that its largest grants—those of more than £5 million—are paid out on average over four years and two months, although some can take as long as eight years.
I hope that the Minister will be able to give more details about what the redistributed funds will be used for. I know that that Bill states “without altering the purpose”, but what exactly does that mean? Who will define “purpose”? If heritage funding is being redistributed, who will ensure that an adequate proportion is spent on, for instance, built heritage or environmental heritage? Who will ensure that a future Olympic site—perhaps Wembley or Old Trafford—will not one day be designated a site of sporting heritage to celebrate the 2012 Olympics, if there is an overspend? Under the Government’s proposal, what would stop them from, in effect, bailing out the whole Olympic site by designating it part of our sporting heritage? It will be difficult to argue that it is not part of our sporting heritage in the aftermath of 2012. Lo and behold, redistributed funds could then be used to plug a gap following an Olympic overspend; something that we are all concerned about.
Government amendments No. 5 and 6 give the Government the power to seize lottery balances and give them not only to another, unnamed lottery distributor, but to anybody they so choose. It could well be another lottery distributor, but, as the Bill is drafted, it could equally well be the Treasury. It seems as though the Secretary of State could even name a private company in the order. Perhaps that would not be of much concern to those of us who believe in the private sector, but I suggest that it would cause considerable disquiet to some Labour Back Benchers.
That is why the clause represents what I believe—the view is shared by many others—to be potentially one of the most flawed pieces of legislation that the Government have brought forward. The national lottery was carefully set up so that distributors were subject to a series of proper checks and balances and public scrutiny. There is nothing in the amendments to make the body to which the Secretary of State chooses to give lottery funds subject to any of the regulations mentioned in the Bill. Is that not rather strange coming from a Government who are so fond of making prescriptions and giving directions to lottery distributors?
I know that the Government have included the amendments to solve the problem of what to do if they seize the HLF’s balances. As the Bill was originally drafted, they could give the funds only to another lottery distributor and clearly the Arts Council or Sport England would not be capable of managing heritage projects. However, who are the Government saying should handle these funds? Are we really content to give the funds to anybody? Are we saying that the HLF does not do an exemplary job and that we think at the back of our minds that there could be unspecified, unnamed, unknown organisations out there that might do it better? The only other body that I can think of that would be capable of handling such projects is English Heritage, but, as far as I know, English Heritage has no idea that it might receive any of these funds.
There is clearly no point in including this clause about creating other avenues for distribution if the Minister has not thought about the distributors that might want to be part of it. When he informs us of the organisation he has in mind, I shall be interested to know if has talked to English Heritage, for instance, to see if it might be interested in handling some of those funds.

Tom Harris: Since there are no Scottish Nationalists—shamefully—on the Committee, but there are a couple of Scots on the Government Benches, I just want to put on record that giving English Heritage the job of distributing Heritage Lottery Fund money would not go down well north of the border. Given that Scotland does well—better than the rest of the United Kingdom—out of existing arrangements, we do not want to leave it up to English Heritage to start distributing funds.

Roger Gale: Order. The hon. Gentleman made a slightly disparaging remark about the Scottish Nationalists. He will appreciate that the composition of the Committee is a matter for the Committee of Selection. It is not a matter of choice for any individual party.

Hugo Swire: I shall not be tempted down the road of criticising either the Scottish Nationalists—you would not allow me, Mr. Gale—or the fact that in other areas of finance, the Scots often do so much better than the English. As I am half Scottish, 50 per cent. of me rejoices and the other 50 per cent. is outraged; I should be a Liberal Democrat, really. I do not mean to disparage the Liberal Democrats, who are present to answer for themselves.
The hon. Gentleman is happy in Scotland. Great. Let us leave things as they are. I do not suggest that other bodies could do half as good a job as English Heritage or Scottish Heritage, or whatever the body in Scotland is called. We should not go down that avenue, so I am in accord with the hon. Gentleman.
We cannot let the provision through on the Minister’s assumption that the powers are merely reserve powers, as he has argued at other stages of this Bill. My hon. Friend the Member for Isle of Wight pointed out that reserve powers may not be exercised, or may not be designed to be exercised in the Minister’s  mind or the Secretary of State’s mind, but if they are in a Bill, by definition they can at some stage be used by a Minister.

Don Foster: Does the hon. Gentleman agree that he could go further? The reserve powers may be used, and that is a worry; but equally, there is a worry that the existence of the knowledge of the potential use of those powers can have a knock-on impact. Is he aware for instance that in the Gambling Bill, which we debated recently, a set of reserve powers of the Secretary of State seriously reduced the share value of several seaside entertainment outlets?
Does not the hon. Gentleman accept that for a range of organisations the reserve powers under discussion could lead to uncertainty about the security of funding? Their being on the statute book is alone causing a problem.

Richard Caborn: Rubbish.

Hugo Swire: The Minister says, “Rubbish”, but I am in accord with the hon. Member for Bath. It is not only the uncertainty that the provision creates in those coming forward to obtain funding for their regional projects. After all, the Minister has told us that the Big Lottery Fund is designed to be a one front door—

Richard Caborn: One-stop shop.

Hugo Swire: A one-stop shop, so that more people can apply and applying becomes easier. However, we seem to be fatally undermining one sector—the heritage sector—by creating uncertainty. We do not know, but people might be less inclined to come forward with local projects.
The hon. Member for Bath is right to say that the provision is creating uncertainty also in those who do such a good job in the Heritage Lottery Fund and in that sector. I must tell the Minister that following the creation of the New Opportunities Fund, the heritage sector feels pretty hard hit by the Government. It does not feel that it is getting the support that it deserves.
The absence of a Heritage Minister in the Upper House sends signals to that sector, and it would rather have more positive signals. I do not believe that anything in the Bill is designed to give a warm feeling to the heritage sector.

Andrew Selous: Does my hon. Friend agree that one major beneficiary of the Heritage Lottery Fund has been the Church of England, which has received nearly £300 million since 1994? Does he also agree that when the Minister responds to this debate it would be good to hear that its position when the Bill is enacted will be no worse than during the past 11 years?

Hugo Swire: I was talking about warm feelings so it is appropriate that my hon. Friend referred to divine matters. From the spiritual to the divine; he like me and other members of the Committee will have received correspondence from the Bishop of London voicing his concern on behalf of the Church about the Heritage Lottery Fund and the funding stream. Churches and places of worship in this country play a  vital role in local communities and anything that threatens or undermines them should be resisted. I am not beating a religious drum; I am saying that from a heritage point of view. Even atheists—it is unfortunate for people if they are atheists, but there will be some in this Room—can support the principle that places of worship are a vital part of our built heritage and our community. I am not surprised that the Bishop of London voices the views of the cathedral. He sent me a nice letter and I am envious that he is able to sign himself “Richard of London”, which is very elegant.

Emily Thornberry: Is the hon. Gentleman aware of the predicament of Union chapel in my constituency, which Time Out London called an unknown gem? It is one of the best places in London for a concert and is also a church. It is just off Upper street and I recommend it.
The problem is that it does not have a roof and in 1997 it was granted money from the Heritage Lottery Fund towards rebuilding the roof. I paid for a tile and one of the vicars paraglided down the side of the building to raise more money for the roof, but we are now nearly 10 years down the line and the roof has still not be built. That £275,000 of Heritage Lottery Money is sitting in a bank account and I hope that we shall be able to have it at some stage. Does the hon. Gentleman agree that we need an assurance from the Minister that the money will still be available if the amendment is made?

Roger Gale: Order. This is probably an appropriate moment to remind all hon. Members that interventions should be interventions and not speeches.

Hugo Swire: The hon. Lady makes a good point, which will no doubt be faithfully reported in her local journal. She is right to seek reassurance from the Minister, but her abseiling vicar should seek medical help at the earliest opportunity. If he finds himself out of a job, Christmas is coming and he could do a good job going up and down people’s chimneys.

Don Foster: I am grateful that the hon. Gentleman gave way for a brief intervention before he finished replying to the hon. Lady. I hope that in his response to the hon. Member for Islington, South and Finsbury (Emily Thornberry) he will draw her attention to clause 9 because it will remove from the Heritage Lottery Fund precisely the same amount that goes in total to places of worship in England, so she would certainly lose out.

Roger Gale: Order. The Chairman would prefer the Committee to discuss clause 9 when we get to clause 9.

Hugo Swire: The hon. Member for Bath is braver than me; if he continues testing you, Mr. Gale, he may end up inadvertently abseiling from the window into the Thames.
The hon. Member for Islington, South and Finsbury raises a good point, a perfect example of a good local community building, with funding from the Heritage  Lottery Fund. that needs further funding. That needs to be guaranteed with reassurance that that funding stream will continue to be available.
Other members of the Committee will have similar examples in their constituencies. The hon. Lady’s example is not unique, which is why we are batting for the Heritage Lottery Fund and the heritage sector. They seem to have been bowled some centre-stump balls from the Government since 1997.
It is worth bearing in mind that the second highest balances belong to the New Opportunities Fund. I crossed swords on that during DCMS questions earlier this week.
The Government-directed body—they have control over the New Opportunity Fund—is the second biggest offender in this area as far as the Government are concerned. The NOF balances actually rose when the Secretary of State made it a target that all balances should be reduced by 50 per cent. Will the Minister use the powers in clause 8 against the Big Lottery Fund, or are they just to be directed against the heritage sector? I doubt it. I doubt that he will chastise the Big Lottery Fund, even though the fund’s corporate plan of 2005–06 shows that its balances will average out at more than £400 million. Perhaps the Minister will say a few words about that.
I put this to the Minister; let us get some sort of commitment from the Heritage Lottery Fund to set a timetable to reduce its balances as soon as possible, rather than threaten it with draconian reserve powers. Will the Minister agree to that? Otherwise, he must explain his rationale. I urge him in the spirit of co-operation not to press the Government amendments and to omit the whole clause.

Charles Walker: I see the Minister growling and I do not want to get on his wrong side, so I hope that he will take this short speech in the spirit—[Interruption.] He is a very frightening man. I understand that he is also a very nice man, though, whose family love him.
A constituent of mine raised a concern about clause 8. It could give the Secretary of State almost unlimited power to siphon money from one good cause to another. For example, although we welcome the Olympics to London—and to Broxbourne in particular—there is a chance that they could cost more than anticipated. Picking up on a theme mentioned by my hon. Friend, the Secretary of State could argue that the Olympics went beyond sport and that in reality the event was a vehicle for promoting the nation’s arts and heritage, as well as education, environment and health. Invoking such ideas, the Secretary of State could reach into other pockets of money and somehow justify procuring money to fund the Olympic shortfall.
I believe that the Secretary of State said during a sitting of the National Heritage Committee on Tuesday that she could not guarantee that there would not be an Olympic overspend. Will the Minister assure us that if an Olympic overspend arises, it will be funded  either out of direct taxation or out of the 12 or 12.5 per cent. that the Treasury takes in lottery tax? We would not want some of the money set aside for good causes other than the Olympics being used to fund the London Olympics in 2012.

Andrew Turner: I shall continue with the point advanced by my hon. Friend the Member for East Devon. I would like to declare an interest. I am not sure whether I am a patron, a vice-patron or a vice-president, but I am involved with the appeal by Sts. Thomas’ church in Newport, which is at the centre of the island. For the benefit of Hansard I should say that the church is dedicated both to St. Thomas and St. Thomas à Becket, so it is difficult to get the apostrophe in the right place. It is the burial place of Princess Elizabeth, who died of a broken heart in Carisbrooke castle, shortly after the martyrdom of her father King Charles I. It was restored under the direction of Prince Albert, but sadly it is now falling down again.
The appeal will be seeking a grant from the National Lottery fund. I am worried that, should a grant be made by the fund and should the building proceed, the money might be siphoned off at a future date. On the other hand, I suppose I should be concerned lest by voting for the amendment I prevent the church, whose appeal I so strongly support, from receiving money from the heritage fund that might otherwise go to another body. For certainty, my preference is for those bodies that are given grants to use them, not for one body to overtake another in the receipt of a grant. Therefore, I support the amendment tabled by the hon. Member for Bath.
Mr. Gale, you have allowed us to broaden this debate into a stand part debate as well.

Don Foster: I understand that the Chairman said that he would allow us to use the amendment to widen the debate. Obviously, he will decide whether we have strayed beyond the amendment, but I would hope that so far he thinks we have not. We may wish to have a stand part debate in addition to the debate on the amendments.

Roger Gale: Order. Before we go further down that road, I have known the hon. Gentleman for enough years to know that he is quite prepared to try it on. He knows me well enough to know that I shall not let him.

Andrew Turner: I take that as an invitation to stray, Mr. Gale, and stray I will.
There is a halfway house—a third way, one might almost say—that is not as wimpish as that offered in the amendment, but which would allow effective use of the funds while not preventing their being used by the bodies to whom they have been allocated. The Heritage Lottery Fund could be granted the same powers as are proposed for the Big Lottery Fund in new section 36B to the 1993 Act to make loans, particularly to private bodies that are engaged in the restoration of private buildings.
Another good example from my constituency is the Georgian stable block at Osborne house. Unlike most of Osborne house, which is in the care of English  Heritage, the old stable block is held on a lease from the Crown estate by a private individual, Marion Harrison. She and her family are putting a huge amount of money into its restoration, but it takes a long time for a private individual to raise enough money. The intention is to develop a money-making operation, but also to restore a fine Georgian building to which the public would be allowed access. There would be a return in the form of public access. An early loan from the Heritage Lottery Fund would enable the work to be done more quickly and the public to have access sooner. Why is the Minister proposing such a power for the Big Lottery Fund but not for other funds?

Richard Caborn: We have had a wide-ranging discussion, about 99 per cent. of it misleading. First, I wish to put on record my support for the good work that the Heritage Lottery Fund does. My Department’s relationship with that fund is no different from its relationship with any other lottery distribution fund; we have a good relationship. The fund has done a fantastic job, and we hope that it will continue to do so.
On ensuring an allocation to the heritage of this nation, the Secretary of State has indicated that funding for the three good causes—sport, arts and heritage—will continue. It is good to know that we will be here well into that period and that the Labour Government will still be in power. Obviously, everybody trusts that we will still be in power. I thank the hon. Member for East Devon for his support and hope that he will continue to serve in Opposition for many years to come.

Hugo Swire: The Minister must indulge me by giving way because one day he will be sitting here and I will be sitting there. Yet again, he gave a commitment that the heritage sector would receive funding post–2009, regardless of who was in power. What he did not say, whether by deliberate omission or not, is that the Heritage Lottery Fund will be the principal distributor of lottery funds to the heritage sector post–2009. I invite him to say that now.

Richard Caborn: Any Government who tried that at this early stage would be absolutely stupid. We will hold a wide consultation to ascertain what the British people want. We are in the business of consulting the people who are affected. We will evolve the lottery and its various funding streams. We have given a commitment about the three broad bands that I have mentioned: sport, arts and heritage. The format for distribution will be a matter to be decided at the time. A Minister would be foolish to give that type of commitment so far away from 2009. We will see what happens then. I put on record my support for the HLF and the work that it, along with the other bodies, does.
Amendment No. 98 would make specific provision in new section 29A of the National Lottery etc. Act 1993 for the Comptroller and Auditor General to make recommendations on the desirability of using the order-making power created by the new section to  reallocate an excessive national lottery distribution fund balance from a lottery distributing body to any other body.
I can wholeheartedly assure hon. Members that the Government would not seek to use the reallocation order-making power without first giving the matter sufficient consideration. We would use the reallocation power only as a last resort if a distributor had persistently failed to take steps to manage its national lottery distribution fund balance to a reasonable level. The power could not be used without a consultation involving the distributing body concerned and without a vote in both Houses.
The power as drafted would not prevent the Comptroller and Auditor General from offering an opinion should the Government ever propose to make an order using the power. Indeed, it is highly probable that the Comptroller and Auditor General’s view would be sought, in view of the ongoing NAO and Public Accounts Committee input on the balances question. In that case, the Government would, naturally, carefully consider what the Comptroller and Auditor General had to say. I therefore ask the hon. Member for Bath to reconsider pressing the amendment to a vote.
Hon. Members will remember that when the Government reintroduced the National Lottery Bill, they modified the provision to create an order-making power to reallocate an excessive national lottery distribution fund balance from one distributor to another. The equivalent power as framed in the previous National Lottery Bill, which was introduced in the 2004–05 Session, would have enabled a balance to be reallocated not only from one distributor to another but from one good cause to another—for example from the arts to sport, or from the national heritage to charitable expenditure. In contrast, clause 8 of the current Bill creates a power that does not allow a transferred balance to be reallocated to a lottery good cause that is different from the one supported by the distributor from which the balance is to be transferred.
May I just underline what my hon. Friend the Member for Glasgow, South said? There will be no change in the funding that is in place. We are talking about getting the money to its destination in the most efficient and effective way. It is interesting that, since 2004, the HLF has brought its balance down by another 17 per cent. As far as we are concerned, if that was to continue, it would more than satisfy us.
In 1997–98, when the balances were touching nearly £4 billion, a previous Secretary of State brought all the lottery distributors in and they said at that time that by the end of 2004 they would have collectively brought their balances to £1.5 billion. That agreement is on the record, but it has not been delivered. It is amazing that the Opposition do not even want to follow the reports of the PAC and the NAO and introduce some better financial management. As I said to the hon. Member for Bath, if we were assured that the reductions would continue until the balances reached about £1.5 billion to £1.8 billion, we would be satisfied. We believe that  it is right, as the PAC has said, that we put that pressure on, but we also believe that there needs to clear discipline.

Adam Afriyie: Will the Minister give way?

Richard Caborn: If I may, I will digress first—with your permission, Mr. Gale. We have had exactly the same problem with structural funds from the European Union. The EU has recently started to withdraw money if draw-down does not take place. The provision that we are discussing is nothing like as draconian as that. It is a last resort, but at least it will bring some discipline to the system.
Already, the Heritage Lottery Fund has in 12 months reduced its balances by a further 17 per cent. That is welcome, and if that trend continues there will be no need to use the powers. If we had to use them, it would be after wide consultation, and with no detriment to the schemes being funded nor to the allocation of those funds. I say to my hon. Friend the Member for Glasgow, South that that is a commitment. The only difference will be that it could well be—I hope not—that another body would dispense the funds more efficiently than the body that allocated the money.

Adam Afriyie: I think that the Minister has just answered my question. I merely wanted to inquire whether committed funding would still be available.

Richard Caborn: The answer is yes.

Hugo Swire: The Minister may have answered my hon. Friend’s question, but he certainly has not answered mine. Does he not make a distinction between the funding process of the New Opportunities Fund and the Heritage Lottery Fund? Surely he would admit that there is a difference. He has just said that if he had to, he would use the reserve powers to introduce other organisations that could be more efficient than the existing fund at handling the funds. What sort of organisation does he have in mind, and why would it be any more efficient?

Richard Caborn: I am not going to go down the route of saying who would be handling the funds. However, the provision would be used after wide consultation. If there were a genuine difference that showed that we were still getting value for money from the Heritage Lottery Fund due to the nature of the funding that it distributes, as against the Big Lottery Fund, that would be taken into account as mitigating circumstances.
We are not in the business of trying to undermine such bodies as the HLF, Sport England, UK Sport or the Arts Council of England, which are extremely good at their jobs; but we must take into account public opinion. Just under £4 billion was being held in balances, and that has been brought down to just a little more than £2 billion.
It is not the PAC nor the NAO that has to go in front of Jeremy Paxman on “Newsnight” to defend the Government against accusations of incompetence for allowing a body to hold such large balances; it is politicians. This House must take those decisions, and that is why we are introducing a framework for financial management that is in concert with the NAO and the PAC, and with what the general population say. Those balances were between £1.5 billion and £1.8 billion. They are adequate, but there may well be differences between funding regimes because there may be legitimate reasons for keeping certain balances for certain amounts of time. They will form part of the evaluation.
At the end of the day, both Houses of Parliament will make the decision whether to take any action. The deterrent factor is already working in my view. The balances of not only the HLF but other lottery funds have started to come down. The deterrent is having the desired effect, which is that the balances reach a reasonable figure. Generally, business people welcome that.
As a member of that great party of free enterprise, does the hon. Member for East Devon believe that a business would hold £4 billion in unused reserves and just gain interest on it? Would that asset not be used much more productively? A business has to have certain balances, but the level of those balances becomes highly questionable when they reach the rate of £4 billion.

Charles Walker: In answer to the Minister’s question, there was a company called GEC which had a large cash balance, and then a Labour peer took it over. I think that it is now on the verge of receivership.

Richard Caborn: One swallow does not make a summer.

Hugo Swire: We are going wide of the mark, not in terms of the debate, on which it is your right to decide, Mr. Gale, but in terms of the argument. It is a false analogy to compare a mythical company with £4 billion of reserve money ticking over—that is a commercial decision—with an organisation that distributes funds to projects and needs careful monitoring. The Minister is going down a dangerous road by insisting, particularly in the case of the heritage sector, on accelerating the drawing down of funds down just so that he can have an easier ride with Jeremy Paxman. I am sorry if Government policy is being dictated by fear of Jeremy Paxman. The Minister should adopt the policy of many of his colleagues and refuse to appear on “Newsnight”.
The Minister must know about the disquiet about the reserve powers that the Government are giving themselves in the clause. He keeps saying that he is doing what the public want, reflecting what the public want: perhaps he should do what the public want and not live in such fear of hard questioning from Jeremy Paxman. His own consultation document on the specific power of redistribution states that of those who responded 42 were against and only nine were in favour. Clearly, the public do not want the Secretary of State to have the power of redistribution.

Richard Caborn: I did not know whether to ask hon. Gentleman to give way half way through his intervention. May I put on the record the fact that inadvertently I probably misled the Committee? The balances are down by 17 per cent. since January 2003 and by 10 per cent. since last year. I wanted to put that straight.
The hon. Gentleman asked what is the difference between the NAO, the PAC and the Comptroller and Auditor General. The difference is that we are accountable to the public, although we may have to go in front of Jeremy Paxman and the PAC. The hon. Gentleman should reflect on what the PAC and the NAO said about the balances in not one report, but two. They said that the balances should be reduced and we are trying to do that systematically, in a way that takes account of all the prevailing circumstances, will not put any funded scheme at risk, and ensures that any action taken after that wide consultation is the result of a decision of the House. The powers are reserve ones that can be used in extreme circumstances, but we are starting to have the desired effect of reducing the balances, which have started to decrease. If they fall to between £1.5 billion and £1.8 billion, I am sure that the PAC, the NAO and the Government will be satisfied that that is broadly acceptable.
The equivalent power in the National Lottery Bill that was introduced in the 2004–05 Session would have enabled a balance to be reallocated from one distributor to another. In contrast, clause 8 of the Bill before us creates a power that does not allow a transferred balance to be reallocated to lottery good causes. In other words, it allows a balance transferred from one distributor to another to be spent only on the same good cause, whether that is the arts, heritage, health, education, the environment or charities. The Government made that change because they listened to public concern that a good cause could suffer unfairly because of the inability of an individual lottery distributor to manage funds in a way that optimises the benefits to projects on the ground and avoids building up excessive balances. However, the change in the proposed reallocation power limits the practical application of the power in relation to distributing bodies which are, at the moment, the sole distributor for the lottery good cause that they support. It would mean that if the reallocation power were to be used to transfer a balance from such a distributor, either the balance would need to be transferred to an existing distributing body whose expertise was in a very different good cause and whose powers to spend on the good cause may be limited; or, more likely, the balance would need to be transferred to a new distributor for that good cause.
Under section 29 of the 1993 Act we have the power to add new lottery distributors in relation to a good cause, which then could receive the balances, but that power also requires us to give the new distributor a percentage share of that good cause’s income. Government amendment No. 5 creates a new way of utilising the reallocation by enabling an order made under it to name, as the recipient body for a transferred  balance, a body that is neither an established distributing body, nor a body added under section 29 from the list of distributing bodies in section 23 of the 1993 Act. Government amendment No. 6 would allow the Secretary of State to pay money from the national lottery distribution fund to a body mentioned in an order made under the reallocation power. Without amendments Nos. 5 and 6, that power could not be used. Amendment No. 6 also has the effect of ensuring that the powers conferred and duties imposed on existing lottery distributors apply to the body mentioned in the order. That will allow the body to act in the same way as other distributors, and ensure that it is subject to the same level of accountability and control.
I emphasise again that the reallocation powers will be used only as a last resort and in exceptional circumstances, such as where the distributor has consistently failed to take steps to manage its balances in line with the Department’s guidance and the recommendation of the July 2004 National Audit Office report about the management of the national lottery funds’ balances.

Don Foster: I begin with a huge apology to you, Mr. Gale. It is clear that I have erred and strayed by failing to keep my remarks closely confined to the amendment. I have also allowed a number of Committee members to follow me down that path. So wide-ranging has been our debate that we have, in effect, had a clause stand part debate. I could well understand any ruling of yours that we were not allowed to debate the clause further. I was convinced about how far we had gone when, in the detailed discussion of the Big Lottery Fund and some of its functions, I heard the hon. Member for East Devon tell us that he did not believe that it was competent enough to be a one-stop shop and that it could only be a one-front-door organisation. By the time that we had reached that point, I could understand your concern, Mr. Gale.
However, I am grateful that it has been a wide-ranging debate. If it does nothing else, it will advise the Heritage Lottery Fund that it needs to change the structure of its grant-giving processes. It is clear that it should have not only a separate category dealing with places of worship—that was covered by the hon. Member for Islington, South and Finsbury and her roofless chapel—but one dealing with stables, which the other two projects mentioned are about.
I was slightly taken aback by the Minister’s suggestion that Opposition Members’ speeches had led him to believe that there was a conviction among our parties that the Labour Government would be in power for a very long time. I reflected on that, but then I remembered that he went on to say—clearly indicating that he does not believe that Labour will be in power for very long—that 99 per cent. of what we had said was misleading. I assume that that bit about the Labour Government being in power was in the 99 per cent.
My biggest concern about having had so wide-ranging a debate is that it means we have almost entirely lost sight of my amendment. The Minister has  talked about the vital importance of the powers that the Secretary of State would have, given his rationale of why they might be needed, and given assurances that there would be wide-scale consultation; he said that both Houses would have the right to make a decision and to vote on the matter. He has given an absolute assurance, to the satisfaction of us all, that if the power was used and funds were transferred to another distributing body, whether new or already in existence, all the commitments and liabilities would go with them. We are grateful for that assurance, but my amendment was not about any of those things.
The amendment is quite simple. Given that we have lost sight of it, however, I remind the Minister precisely what it says:
“In exercising his duties under section 33(3), the Comptroller and Auditor General may make recommendations to the Secretary of State regarding the desirability of making an order to provide for the money to be held for distribution by a different body specified in section 23 (without altering the purpose for which the money is allocated).”
I began my remarks by saying that the amendment was wimpish and that I would prefer to move an amendment that got rid of the powers, but that I was moving one that merely said that the Comptroller and Auditor General should make a recommendation to the Secretary of State about the order. The Minister agreed that it is almost certain, but not guaranteed, that the Comptroller and Auditor General will be consulted by the Secretary of State, so we are almost there, but nothing he has said justifies his unwillingness to accept the amendment.

Richard Caborn: The hon. Gentleman answers his own question. I specifically described the role of the Comptroller and Auditor General and said that he would be consulted. I also talked about the ongoing NAO and PAC input into the question of balances. The hon. Gentleman went so wide in moving the amendment that I thought that—he is not even listening, Mr. Gale.

Don Foster: I am.

Richard Caborn: I thought that some of the allegations and charges that the hon. Gentleman made should be answered. If next time he keeps his comments narrowly to the amendment, I will answer on that specific matter.

Don Foster: I said that I had erred and strayed. I apologised to you, Mr. Gale, and the Committee, including the Minister. I do not blame him; I merely point out that because that has happened, it would be helpful to get back to the amendment in my final remarks.
My point is simple: the Minister says that the NAO or the Comptroller and Auditor General will “almost certainly” be consulted; I merely say that that should be a requirement—that the Comptroller and Auditor General should make recommendations to the Secretary of State. I do not see the problem, so I find  myself in difficulty. Had the Minister accepted the amendment or given a slightly stronger assurance, I would have asked that it be withdrawn, but I now have the dilemma of whether to press the amendment to a vote or to follow the alternative course of action, about which I am beginning to feel rather more strongly, of trying to vote down clause 8. I choose to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 5, in clause 8, page 5, line 14, leave out ‘section 23’ and insert ‘the order’.— [Mr. Caborn.]

Hugo Swire: I beg to move amendment No. 32, in clause 8, page 5, line 15, at end insert—
‘(2A)An order under this section may not prevent a body from meeting commitments it has made to provide funds in accordance with any agreed timescale.’.
The amendment would protect heritage projects that have already had funds committed to them in the event that Heritage Lottery Fund balances are taken under the reserve powers in the clause. I think that the Minister has already guaranteed that that will not happen but the proposed amendment deals with the potential use of those reserve powers. The Minister has given an absolute, categorical guarantee, but that is not in the Bill and, as we have established over the past few days, we regard that as a fundamental difference. I shall not stray back over that ground.
If for some reason balances were taken and given to another body—we have heard that that is possible under the Government’s proposals—the amendment would ensure that projects to which funding has been committed but which have not yet drawn down all or part of that funding will not lose those committed funds. That would mean that projects that are a long way into the planning stages or midway through a programme of restoration will not face sudden closure. We have heard how long projects can take and how much they can cost. They require different sorts of funding at different stages: some need to be heavily front-loaded, some need funding midway through, and others need funding more toward the tail-end. It is extremely difficult to apply one blueprint to each heritage funded project.
I hope that the Minister will accept the amendment; I even expect him to do so, given what he has said in the past few minutes. It is a reasonable amendment and only clarifies what appears to be the general thrust of the caveat in subsection (2). He must know that if he refuses to do so, he opens up the prospect of already committed lottery funds being used for other projects. I am sure that he does not want that, but if it does happen, what will happen to the existing commitments? Who will decide what the new projects are and which body will take over the balances? I have pressed the Minister on that, but he has been unwilling to share his thoughts with the Committee.
If the amendment is refused, anyone applying to the HLF will have to take into account the risk that heritage funds could vanish before their eyes in the  middle of a project. I wonder to what sort of liability those who had originally drawn down the funds from the HLF, or those who are running or responsible for the project, would be exposed? What would be their exposure if in good faith they had sought £10 million or £5 million from the HLF, received a third of it, got the project under way, employed architects, retained contractors and found suddenly, midway through, that the money was no longer there? I wonder what that would expose them to in terms of their legal responsibility. Again, the law of unintended consequence come into play. I wonder whether the prospect of people becoming personally liable in that scenario might deter some people from starting such projects and or from becoming involved in what could be major rejuvenation programmes in local communities—something that both the Government and Opposition are keen on.
We simply do not know enough about the powers in the clause to let it go through unamended. That has been clear from the start. I urge the Minister to accept the amendment, which would be wholly in line with his personal assurances. He would be in the difficult position of arguing against himself if he rejected the amendment. I genuinely cannot see any reason why he cannot accept it.
If the Minister accepted the amendment, would that not be wonderful? It would genuinely show that he does not want to send the wrong signals to the heritage sector. I do not know whether the Government are still signed up to this, but they announced a project called “Listening to Britain”—or something like that: Ministers were meant to go out and listen to what people were saying. Perhaps people out there listening to this debate would wake up and say, “Hey! The Government are listening to us.” We are nervous about the matter, but if the Government listen to what the Opposition have said and take on board our concerns about the guarantee of funding for projects under the legislation, people might be somewhat reassured.
To use a phrase I dislike intensely, the Minister could achieve a double whammy. He could reassure the cynics among us who suspect more devious intentions behind the clause and he could reassure the heritage sector that it will not suddenly be cut adrift mid-stream if the Minister, the Secretary of State, the Chancellor or anyone in the Cabinet finds an urgent need for funding in another area that could be loosely designated a heritage matter, leaving many projects throughout the land hung out to dry. I urge the Minister to accept this very reasonable amendment.

Richard Caborn: We went out, consulted and got elected. We are discussing the National Lottery Bill, which does not just concern the Heritage Lottery Fund. I know that the HLF has done a lot of briefing, but the discipline in the Bill is for all the distributors, not just the HLF. As I said, it is bringing its balances under control. They have come down by 17 per cent. in the past 12 months and are coming down by another 10 per cent., and that is moving in the right direction.
The amendment seeks to add detail to the new power set out in clause 8 to reallocate excessive national lottery distribution fund balances from one lottery distributing body to another one. It would add a requirement that the power may not be used to prevent a distributor from meeting existing contractually binding grant commitments if the distributor and the grant recipient have agreed a timetable for paying the grant.
The hon. Gentleman may be concerned about the effect of the reallocation order-making power on lottery distributing bodies that pay grants over extended periods. Let me reassure him that he need not be concerned. We would use the reallocation power as a last resort only if a distributor had persistently failed to take steps to manage its distribution fund balances at a reasonable level. The power could not be used without consultation with the distributing body concerned and a vote in both Houses. If we were to propose making an order, one of the key factors to consider would be the existing commitments of the distributor concerned and when they fell due for payment.
I can give an absolute assurance that the clause is not about individual schemes. On the contrary, it is about lottery fund distributors bringing their overall balances down to something that is reasonably manageable; down to where the PAC, the NAO, the Government and the general public believe they ought to be. We will ensure that the financial commitments of the individual schemes will be fulfilled.
The Government have said that they would not exercise the power in a way that would threaten or put into doubt any commitment of a distributor from which they proposed transferring a fund balance. I am happy to repeat that undertaking today.

Adam Afriyie: For the sake of clarity, can the Minister point out where in the Bill that commitment is made?

Richard Caborn: I have just made the commitment. In operation, an order would be a last resort. That can be quoted in any of the debates that would have to take place in both Houses before the order could be enacted. I give that clear assurance; it is important to do so.
The clause is not about creating uncertainties in the marketplace where the distributors use money to invest in and develop schemes or projects. That is not the object. It is about ensuring that lottery funds are used properly and effectively, and dealing with what the NAO and the PAC have been saying for some time. Indeed, the funders themselves said in 1997 that the collective balances ought to be brought down to about £1.5 billion. They are nowhere near that. Even with all the pressure that we have put on the funds during the past four years, they are still in excess of £2 billion. That is why we have introduced the measure.

Adam Afriyie: I thank the Minister for being so generous in giving way. I wish to clarify what I said earlier. I did not intend to insult him in any way or to question his integrity. It has been clear throughout our  proceedings that he is doing an adequate job of steering the Bill through the Committee. My question was about what would happen if there were in law no protection of existing projects. If the Minister were not here tomorrow, would the Minister who followed him necessarily have to stick to his commitments?

Richard Caborn: The Government would have to carry out commitments made by another Government, unless a change were made in the law or by some other method. Ministers have to act within the law and be reasonable. The commitment has been given, and that is what will stand and what would reasonably be carried out. It is not just a commitment of a Minister but a commitment in what will, I hope, be an Act, that any other Minister who comes to the House with an order would be subject to a vote of both Houses. The debate and scrutiny are there, and the scrutiny is set against the background of what is in the Act. That is why I give those reassurances now.
I am grateful to the hon. Member for East Devon for tabling the amendment. I am sure that it is just a probing amendment. He obviously wants to get some reassurances on the record and I am more than willing to give them. We are talking about good financial management of the funds; we are not in any way trying to undermine any of the distributors or any of the schemes or projects that they are investing in. That would be completely contrary to what the Government are trying to achieve. What we are doing is in concert with what the PAC and the NAO have told us—on not one, but two occasions—in their reports.
In any case, the amendment is unnecessary as the reallocation powers apply only to balances and not to commitments made by a lottery distributor. The distributor would still be obliged to honour those commitments, which is why it would be important to take into account the commitments in considering how to exercise the power.

Don Foster: I was listening very carefully, but will the Minister just repeat what he said? I think that I heard him say that the existing distributor would continue to have responsibility for ongoing commitments, although the funds would be passed on to the new body for it to start afresh. If I have got that wrong, that is fine; if I have not, I am deeply worried about what he has just told us.

Richard Caborn: I am talking about the expenditure and the commitments that go with it. The distributor would be obliged to honour the commitments, which is why it would be important to take those commitments into account when considering how to exercise the power. We are talking about the commitments, as well as the financial management. I ask the hon. Member for East Devon to withdraw the amendment.

Hugo Swire: This is not a probing amendment.

Richard Caborn: That was a joke.

Hugo Swire: Well, perhaps the Minister would be kind enough to indicate when he is going to make a joke so that we can all prepare ourselves.
We are making a fundamental point. The Minister can pray in aid the NAO report and the timely PAC report, but, overall, those reports are about bringing balances down, and we have done that. The amendment is intended to protect projects that have had funds committed to them from the possibility of those funds being redistributed in some way.
Again, we have the Minister’s verbal commitment on this matter. He has made so many verbal commitments that we almost do not need a Bill; that is, we would not need one if we could hold him to account when we felt that those verbal commitments had not been honoured in any way. I am not impugning his integrity. No doubt he will indicate where he feels that I have impugned the integrity of other Ministers or staff at the Department for Culture, Media and Sport in the past, although I still do not believe that I did.
Again, we are being asked to take something fundamental on trust. Without seeking to insult any individual, I have to say that this Government are suffering from a trust deficit as far as the public are concerned. The Opposition are expected to probe the Executive, of whom the Minister is the shining embodiment, and to hold them to account. Part of that role involves ensuring that things are not just taken on trust, and do not go through with a nod and a wink or on a private reassurance. We are talking about legislation. As the Minister quite rightly said, he hopes that the Bill will become an Act. It would be a dangerous Act if it were not to include this amendment.
Probing amendment or not, it has in fact probed the Minister’s thinking and I do not find his answers or his reassurances sufficient. Therefore, with your indulgence, Mr. Gale, I will press the amendment to a vote.

Question put, That the amendment be made:—

The Committee divided: Ayes 6, Noes 10.

NOES

Question accordingly negatived.
‘()In section 24 of that Act (payments from Distribution Fund) after “section 23”, insert “or in an order under section 29A”.’.—[Mr. Caborn.]

Motion made and Question proposed, That the clause, as amended, stand part of the Bill.

The Committee divided: Ayes 10, Noes 6.

NOES

Question accordingly agreed to.
Clause 8, as amended, ordered to stand part of the Bill.

Clause 9 - Investment income

Question proposed, That the clause stand part of the Bill.

Don Foster: I was desperately hoping that the Minister would catch your eye and lead the debate on this important issue, Mr. Gale. As this is a Government clause, one would have thought that that would be helpful. If I am able to catch your eye in a moment, after the Minister has spoken, I shall be delighted to make my contribution.

Roger Gale: The hon. Gentleman is well aware that I am entirely in the Committee’s hands. If no Committee member leaps to his or her feet, I have no choice but to put the question.

Richard Caborn: I was not going to speak in this stand part debate, Mr. Gale, but if the hon. Member for Bath wants to have a debate, I shall give him some background. I hope that this debate will be more focused than the last.
Clause 9 changes the way in which income earned from the investment of the national lottery distribution fund is divided between lottery distributors. We proposed changes to the method of allocating investment income because we considered that the existing method created an unintended advantage for distributors that hold high balances in the national lottery distribution fund, thus potentially depriving communities of realising the benefits of lottery spending on the ground as fully and as soon as they otherwise might.
The proposed changes will remove that unintended advantage. The Public Accounts Committee report on national lottery distribution fund balance management, published on 18 October, said that the public benefit of lottery money is delivered only when the money is spent in the community. Distributors that follow that advice and get funds out of the door quickly will no longer be penalised because their balances are lower. This measure will not reduce overall returns, all of which will continue to benefit lottery good causes.
The proposed change has other advantages too. The July 2004 National Audit Office report highlighted a lack of clarity on the part of many distributors about their likely future income from the lottery. Of course, there will always be inherent uncertainty about that, but the proposed new arrangements will make it much easier for distributors to calculate their share of the potential future income to the national lottery distribution fund from the Department’s income projections.
The proposed new arrangements are designed to make things fairer and more transparent for all and not to penalise particular good causes or distributors. As the overall balance and distributors’ individual balances continue to fall in line with Government policy, the new arrangements need not, by the time they are likely to take effect, have a major impact on any particular good cause or distributor.

Don Foster: I shall be brief. I fundamentally disagree with what clause 9 proposes; our current arrangement works perfectly well. The Minister has said that the clause will not significantly affect the funds available for any distributor. The truth is that the National Heritage Fund, following the research that it commissioned, is firmly of the view that the provision will mean that it will lose £15 million a year from the total money that it has available for its activities. I could argue at great length about that.

Richard Caborn: Will the hon. Gentleman give way?

Don Foster: I will in a second, because I will be so brief that the Minister can respond to the two points that I shall make.
The Minister has been at great pains to point out in our deliberations on Tuesday and today that what a Minister says is crucial and that it should be a key determinant of how the legislation is interpreted. The Minister said on Second Reading:
“Nothing in the Bill will allow money to be taken from heritage and spent on something else.”—[Official Report, 14 June 2005; Vol. 435, c. 169.]
Will he confirm that that is what he said, and will he tell us clearly that the National Heritage Fund is incorrect in its estimation that it will lose out?

Richard Caborn: In terms of the allocation of the lottery funds as per the prescribed percentage of distribution of lottery funds, the answer is no, the National Heritage Fund will not lose out. However, if the hon. Member for Bath is asking me whether it will lose out on interest accrued from large balances, the answer is yes, because that will be distributed.
All income from moneys gained from interest on balances will be distributed as per the agreement that we had on the distribution between arts, sport, heritage and the Big Lottery Fund. In terms of the Act and the distribution of moneys from the lottery to the lottery distribution fund, the answer is no, they will not lose out. However, the distribution of any moneys accrued through interest on large balances will be distributed as per the agreement on percentages. That is the reasoning we gave for the distribution.

Don Foster: I am grateful to the Minister. He has given a clear answer, and I fully understand the proposal. He did not need to tell me what it says three times. He seems to make it clear that if this proposal goes ahead, notwithstanding how most normal people would have interpreted what he said on the Floor of the House, the amount of money available to spend on heritage by the relevant lottery distributor will be less each year than it currently is. It currently gets its normal distribution according to the formula and its money from the interest on balances.
The money on balances will be less, so there will be less money. I think the Minister is confirming that, and that is a great cause for concern for many people in this country who value the work being done in the heritage field. For that reason, I for one will vote against the clause.

Hugo Swire: I for two, Mr. Gale. That is quite extraordinary. It is a sort of Ruritanian politics. We have a Minister on the Floor of the House saying that the heritage sector will not lose out, and then in Committee a few months later saying that the heritage sector will not lose out, however it will lose out “if this happens”. Either it will lose out or it will not lose out. It is perfectly clear from what he has said that it will lose out.

Adam Afriyie: Perhaps my hon. Friend might ask the Minister to tell us how much interest the sector will lose through the redistribution process. If we could see the numbers, we should be able to see by how much the sector will lose out.

Hugo Swire: I am pleased to act as the conduit for my hon. Friend’s question. Table 10 of the Big Lottery Fund’s corporate plan shows clearly who the real winner is under clause 9. Lo and behold, the big winner is—you will have to wait until Saturday night. No, the big winner is the Big Lottery Fund. That might come as a tremendous surprise to people in the Room, but that is the situation.
How much will the heritage sector lose? By its own estimate, as the hon. Member for Bath said, it will lose £15 million a year, which is a considerable sum. The Minister is looking at me in disbelief, and his officials are no doubt scribbling away so that he will be able to tell us that that figure is completely erroneous, that we  have dreamed it up and that it is yet another example of the Opposition being only 99 per cent. accurate, but I am happy to be challenged on it or to hear another figure. Clause 9, therefore, is designed to reward the Big Lottery Fund, which is fine if that is what people want, but the loser is, yet again, the heritage sector.
The earning of interest on balances in the national lottery distribution fund is not, as the Government have said, a perverse incentive to keep high balances.

Richard Caborn: Of course it is.

Hugo Swire: The point is that the money held by the Heritage Lottery Fund has already been committed; it is not sitting idle. The interest allows for more heritage projects to be completed, which seems a good argument to me. Whatever one’s position on whether the balances in the NLDF should be high or low, it is a fact that the interest earned on those balances pays for more good-cause projects. That is surely a good thing and should be celebrated—a word that is overused these days.
That brings me to my final point—I do not want to rehearse all the arguments that we went over on clause 8, nor would you allow me to do so, Mr. Gale. The Big Lottery Fund is the winner in this. The Government, not satisfied with the Big Lottery Fund, will control half of all lottery funds, but they must surely have realised when drafting clause 9 that it will benefit the BLF by between £22 million and £26 million a year between now and 2009.
The BLF’s corporate plan for 2005, to which I referred in answer to my hon. Friend the Member for Windsor (Adam Afriyie), confirms that the BLF stands to gain most from any redistribution of interest. Since the BLF takes 50 per cent. of all lottery income, it will presumably take 50 per cent. of all interest on balances. In 2006–07, the BLF’s total lottery income would be £616 million under the current system of interest distribution, but £642 million under the proposed new system. That bonus goes to the BLF, despite its admission that its balances in the national lottery distribution fund will average more than £400 million.
Very simply, my point is that the clause will not work as the Minister intends it to—if, indeed, this is how he intends it to work. It will be not a disincentive to all distributors to reduce their balances but, curiously, a positive incentive to the BLF to keep high balances. I hope, therefore, that the Minister will agree to leave clause 9 out of the Bill. To give him an excuse to do so, I quote the responses to his beloved lottery consultation. Of those who gave an opinion, 25 disagreed with the measure and only 15 agreed. The Government called that a mixed response, but it is crystal clear to me. I call 25:15 a clear majority.

Richard Caborn: Will the hon. Gentleman give way?

Hugo Swire: I am concluding my remarks, and the Minister will now have an opportunity to respond. However, I am extremely unhappy and I urge him to withdraw the clause.

Richard Caborn: To make things absolutely clear, in the consultation it was proposed that we move underspent moneys from one good cause to another. That argument was not sustained in the general consultation; it was believed that it was too harsh a discipline for any part of the lottery fund with large balances. We have taken the consultation seriously: we said that we will keep the money for the same good cause, but might change the distributor. The distributor can be another body, as outlined in the previous clause. The action proposed in the consultation was to move moneys from one good cause to another, but we are not doing that. We are keeping the money for the same good cause, but may well give it to another distributor after taking account of all the caveats and safeguards that I outlined.
It is not necessarily the Big Lottery Fund but those funds that keep balances down that will gain. I was looking at the figures this morning, and they stick in my memory: the gainer from the provisions will be sport, because it has just about got its balance down to zero. Even though the Big Lottery Fund has 50 per cent. of the funds, if it has balances, interest will accrue on them. That will be put into the central pot and distributed, so that those who get their balances down to zero will be the big gainers, if there are any, from the redistribution of the interest that accrues on balances.

Adam Afriyie: If there are to be gainers, may I be bold enough to ask who will be the losers,?

Richard Caborn: Those who have the largest balances. The interest on those balances accrues and goes into a pot, and that is redistributed according to the agreed proportions set out. Let us take sport: if it has zero balance, and the rest of the funds have huge balances, they all put their interest into a pot and sport will gain.

Jo Swinson: Does the Minister not accept that, due to the long-term nature of projects funded though the Heritage Lottery Fund, it may need to hold balances in its account? That means that it will lose out.

Richard Caborn: It seems that just one part of the lottery fund is being mentioned here. The only lobby that seems to get its point across is the Heritage Lottery Fund, but it has brought its balance down by 10 per cent. in the past year, so the discipline is starting to work.
We believe that what we are putting in the Bill is absolutely in concert with what the NAO and the PAC have asked us to do to bring about better financial management of balances. It is in the interests of every lottery distributor to get its balances down. That is good financial management. That is exactly what people have been asking for, particularly the NAO and PAC.
According to the figures at the moment, the Big Lottery Fund will not gain. It could well contribute to an increase for sport because it holds balances. The interest that accrues on the balances will be put into the central pot and redistributed as per the usual distribution of lottery funds. So it is those who can get  the nearest to zero balances that will gain, whether sport, arts or heritage. If heritage gets down to zero, it will gain, too.

Don Foster: The Minister fails to understand the argument. He has accepted—indeed, he is a proponent of the scheme—that there is a need to reduce the balances for what he calls good management. That is not disputed. He has introduced clause 8, which gives draconian powers to the Secretary of State, but told us that balances have already reduced significantly without the powers in that clause being in existence. He has suggested that the addition of its powers as a stop-gap will lead to a dramatic reduction in balances.
We are now debating clause 9. The Minister is talking about the clause as though it were a belt-and-braces additional means of reducing balances. I can understand his argument that it is an additional tool in the armoury to reduce balances further. However, I believe that there are already enough powers under clause 8, notwithstanding our failure to amend it. Now he has the additional powers in clause 9. If the powers under clause 8 were the only ones for the purpose of reducing balances, I would understand from the Minister’s case. What the right hon. Gentleman does not seem to understand is that he has given no justification for why he needs yet another power to achieve his objective. What justification is there for changing a well established way of dealing with interest of balances, a method that has been used since the lottery came into being and which has enabled the various distributors to know where they stand and to plan accordingly?
The Minister is right that the provision will have a bigger effect on heritage than anything else, but that means that people who plan will have those plans thrown out. No good reason has been given. He said on the Floor of the House that funds would not be taken away from heritage to give to something else. At the end of the day the Minister has a clear argument for what he wants to do, but the Opposition argue that there is no need to do it. If the Government go ahead, they must acknowledge the consequences. We think that those consequences are damaging. There is a difference in opinion.

Richard Caborn: This is an interesting point. First, on the consultation: there is a school of thought that we ought to be tougher about balances than we are in the Bill. It says that those balances ought to be taken—[Interruption.] I see that the House has got up. We are on overtime now—double pay.

Hugo Swire: Redistribution?

Richard Caborn: As I said, there is a school of thought that argues that we should introduce stringent financial discipline and that balances above a certain level should be redistributed as part of the redistribution mechanism for lottery funds. The hon. Gentleman is absolutely right. We consulted on that, but withdrew because there was a school of thought that said no, that would be too harsh.
The argument has been advanced that we should allow lottery distributors to build up balances and project their future business plans based on the income that comes from the interest accrued on those balances. We say that that is fundamentally wrong. We need to bring in some discipline to ensure that balances are distributed—obviously with value for money in mind—as quickly as possible to the good causes, which is what the lottery and the distributors were set up to do. They were not set up to accrue large balances through what some would describe as inefficiency. The balances have decreased from just under £4 billion to just over £2 billion. Compare that with the target that was given to a Secretary of State back in 1997, when it was believed that the balances for the whole of the lottery ought to be around £1.5 billion.
We are trying to bring back some financial discipline. We put forward the proposition and people said no to it. We then said that we would simply take the interest accrued on balances to be redistributed, which is an incentive to get balances down without affecting the business plan. That is the increment coming in from the national lottery on the proportions that we had agreed in Parliament. That is a halfway house that introduces good financial discipline and responds to the PAC and the NAO reports.

Adam Afriyie: Does the Minister agree that by their nature and the kind of project that they fund, certain distributors will require higher balances? The proposal is that they should be penalised for fulfilling the duty and responsibility that has been set up for them. It seems rather alarming.

Richard Caborn: That is true to an extent, but when we started to introduce further financial disciplines, those balances come down by 70 per cent. over 18 months to 2 years and a further 10 per cent. this year. That money is out in the marketplace where it should have been some time ago. With the extra discipline that we are adding, balances will continue to decrease. That is absolutely right. The lottery distributors are there to get the money out as quickly as possible. Yes, value for money must be borne in mind, but they have to get the money out to the good causes. It should not be accruing in balances.
The measure is about good financial management. I give an absolute assurance that we are not taking balances away from other good causes, that any action we take will consider all the people within that distributor’s influence, and that after that there will be a vote in both Houses.

Hugo Swire: Is there not a danger that in the desire to get all the money out—the driving force seems to be to get all the money out as quickly as possible—the Heritage Lottery Fund may be more inclined to fund smaller projects because it will be terrified that if larger projects, such as the stables at Castlemilk, tied up large sums of money that were allocated but not spent it would be penalised. The Heritage Lottery Fund will  have an incentive to get its money out as quickly as possible to quick-fix schemes. Bigger and more complicated schemes that need funding at different times will suffer as a result. The message going out from the Committee this afternoon is that a big and complicated project is less likely to receive funding from the Heritage Lottery Fund and that small, catchy, quick-fix projects are more likely to receive funding as a result of the way in which the Minister is enshrining the provision in law.

Richard Caborn: It beggars belief. The whole predication is on the back of the Heritage Lottery Fund. I am going to Leicester tonight to open one of the Millennium Commission’s biggest projects. It is not only the Heritage Lottery Fund that runs big schemes. No one runs bigger schemes than the Millennium Commission. The Opposition’s whole defence seems to be the briefing notes of the Heritage Lottery Fund. If the hon. Gentleman reads Hansard he will see how many times the Heritage Lottery Fund has been mentioned during this debate when we are discussing good governance and good financing, and ensuring that the lottery is used in a way that benefits good causes.
I said clearly that in 1997 all the lottery distributors came together and agreed that the balances should be about £1.5 billion by the end of 2004. At the end of 2004 the balances were well in excess of £2 billion. The NAO and PAC are saying that, broadly, £1.5 billion to £1.8 billion is a reasonable reserve. I think that that is reasonable and if the balances continue to come down, we will not have to use the power in clause 8. The provision in clause 9 will be an incentive to get balances down.

Hugo Swire: Well, perhaps as we go forward during the next few years and the social and built infrastructure of this country continues to deteriorate under a Labour Government there will be more calls on lottery funding, which will be a quick way of drawing down funds. Perhaps that explains the acceleration of projects that need funding, but we can have that debate at another time.
I make no apology for arguing on behalf of the heritage sector and the Heritage Lottery Fund because on this side of the House we care very much about our built heritage. It seems from the Minister’s irritation at us for citing examples that he does not care at all. That confirms what the sector already believes.
The Minister is painting with a very broad brush and obliterating with his paint the difference between the New Opportunities Fund, other lottery distributors and the Heritage Lottery Fund. I hear on the grapevine—the Minister will deny this—that the Government, as well as the Minister himself, are somewhat uneasy about the clause. When he has finished wrestling with his conscience, I invite him to accede to our amendment, which would protect those bodies that he is charged with protecting.

Question put, That the clause stand part of the Bill.

The Committee divided: Ayes 10, Noes 7.

NOES

Question accordingly agreed to.

Roger Gale: We have a considerable amount of work to get through. For the convenience of the Committee, I indicate now that unless I receive a message from some arcane source between now and then, I propose to suspend the Committee at 3.30 pm. If between now and then the usual channels seek to work their magic, that is up to them.

Clause 10 - Distributing bodies: consultation

Jo Swinson: I beg to move amendment No. 12, in clause 10, page 5, line 36, leave out from ‘body’ to end of line 39 and insert—
‘(a)must consult—
(i)the Secretary of State,
(ii)bodies (other than public or local authorities) whose activities are carried on not for profit,
(iii)the National Assembly for Wales in relation to Welsh devolved expenditure,
(iv)the Scottish Ministers in relation to Scottish devolved expenditure, and
(v)the Northern Ireland Department of Culture, Arts and Leisure in relation to Northern Ireland devolved expenditure;
(b)may consult any other person;
(c)may take account of opinions expressed to it or information submitted to it.’.
I welcome you back to the Chair, Mr. Gale. The amendment would include in the clause a requirement for distributing bodies to consult in determining how to distribute the money. The Bill enables them to consult, but it does not require them to do so. That distinction is important. The bodies that I believe should be consulted include the Secretary of State, voluntary organisations and the relevant devolved bodies.
It is important that there should be a requirement to consult partly because the record on consultation so far has been far from good. The report in 2004 from the NCVO’s compact advocacy programme concluded that the DCMS had a consultation credibility deficit. It also found that there tended not to be enough time for responses to consultation, decisions were sometimes issued during consultation periods and that responses to consultations had not always been published.
It is not just the NCVO that thinks consultation could and should be improved. Committee members will have received a briefing from the National  Campaign for the Arts, which has also called for better consultation of the not-for-profit sector regarding lottery distribution. Why is consultation important? The issue of Peruvian guinea pig farmers has already been mentioned and I remember the other media headlines, which had an unfortunate effect on the reputation of the lottery. It is important for distributing bodies to ensure that they consult when determining priorities for spending. An important aspect of that is making sure that they consult the public, and there are definitely helpful moves in that direction. It is also important that consultant bodies with specialist knowledge feed into the process.
Project funding can often be complex by its very nature. We should ensure that the relevant expertise is available so that the public consultation is informed. For example, consider the Manchester Victoria baths, which won the BBC’s “Restoration” series in 2003. The baths are still way off completion and last year it emerged that the project had been seriously undercosted. The baths will need an extra £2.5 million—over and beyond the £3.5 million initially bid for—if the project is to be completed. That shows the importance of having proper consultation with bodies that can bring expertise to decision making.
In its briefing statement, the NCVO stated:
“We support greater public involvement in the Lottery, but this should not be in lieu of appropriate consultation, including with the voluntary and community sector.”
As well as increasing public participation, we need to ensure that relevant bodies in the devolved Administrations and the voluntary sector and the Secretary of State are consulted. That is not to say that public consultation is not important. In fact, Big Lottery Fund research has found that nine out of 10 lottery players think that it is important that the general public be involved in deciding where lottery funding goes. Earlier this week, the hon. Member for East Devon and I had the good fortune to be at the conference of the Museums Association. Its representative, Judy Aitken, put it very well in the Museums Journal of August 2005:
“The killer fact is that lottery money is not public or government money. It belongs to those who play the lottery and they should be more involved in decision making and more aware of how money is spent.”
Unfortunately, public awareness of how lottery money is spent is low. Last year, a poll for ICM suggested that the public believed that the same amount of lottery money went to help asylum seekers as to support disabled people. In fact, funding for disabled people from the lottery is nearly 10 times greater than funding for asylum seekers. That illustrates the problem with public perception, which, as we are all aware, can be led by unhelpful headlines and scaremongering. Public participation should be about making informed decisions.
I am keen that the Minister should give an assurance that distributing bodies will be required to ensure that the people involved in the consultations are informed about the decisions that they are asked to make. [Interruption.] I hope that the Minister will respond to that point, even if he is having his own deliberations over there at the moment.
With public participation, it is important to ensure that it is not only popular projects that receive money. Smaller projects and organisations that might cater for specific needs—[Interruption.]

Roger Gale: Order. The Committee is not being fair to the hon. Lady. I understand that there are matters that one or two people might wish to discuss, but it is a good idea that they should do so outside, so that the Committee and I can hear the hon. Lady.

Jo Swinson: Thank you, Mr. Gale. It is important that the lottery can fund projects that are not the most popular or sexy, and that do not capture the headlines. There can be a danger, when involving the public more, that main, popular causes will always win. I spoke earlier about the BBC’s “Restoration” programme, which many people watched and enjoyed. That programme meant that many projects that are not often put in the spotlight were put in the spotlight. Manchester Victoria baths won that series in 2003, but would it have won if it was up against other reality TV programme stars of 2003, such as Natasha Kaplinsky in “Strictly Come Dancing”, or Peter André and Jordan in “I’m a celebrity, get me out of here”? That illustrates the importance of ensuring that popular projects are not funded at the expense of others.
I hope that the Minister agrees that the Big Lottery Fund should make a commitment that the projects on which the public will vote aim to achieve similar things, and that the public will not be asked to choose between projects between which there is a large imbalance in popularity. I hope that he agrees that all distributing bodies should make a similar commitment.

Hugo Swire: We support the amendment. It is important that the BLF should be consulted about where the money goes, particularly in light of its commitment to the voluntary sector for 60 to 70 per cent. of funding. Interestingly, the Government are being a little inconsistent: they want distributors to consult on the distribution of funds, but they will not agree to our amendment No. 28 to clause 7, which would require the Secretary of State to consult the voluntary sector before making directions to the BLF. There is an example of inconsistency on which to end the day, if you so choose, Mr. Gale.

Roger Gale: Order. Before we proceed, let me make it absolutely plain. It is not up to the Chairman when we end the day. The Chairman has the right to suspend the sitting. This Chairman is prepared to sit all night if the Committee wishes to do so, but I get the feeling that it does not. It is up to the Committee to decide how it conducts its business—what point it wishes to reach, and at what point it will cease to try to reach it. I am desperately trying to encourage the usual channels to facilitate an agreement.

Andrew Turner: Before I begin my remarks, Mr. Gale, I must say that I am not aware whether you said that you would adjourn at half-past or at the end of our deliberations on this clause.
I am concerned about the amendment—not the content, but the context. There is no doubt that the content is absolutely sensible, fair and right, but I am concerned about some of the remarks made by the hon. Member for East Dunbartonshire (Jo Swinson) in introducing it.
My concern is about what consultation is and what constitutes a successful consultation. The numbers responding to the consultations that the Minister referred to so far have, as I said in an earlier debate, been pretty small. For example, we heard today that another consultation by the Department for Education and Skills, among young people, received 4,000 responses nationally in comparison to which the responses on the objectives of the Big Lottery Fund pale into insignificance.
I hope that the Minister will understand, and give some commitment to, the fact that a way has to be found of getting real people to respond to consultations; it should not merely be those who are paid to do so—those who work for one of 127 local authorities—or those who are probably paid not very well or not at all but who have a close association with one of the prospective beneficiaries of the lottery money distribution funds.
Is it not time that a real effort was made by the Government to get responses from ordinary voters? We all know that none of us would be re-elected—the Minister for Sport and Tourism, the right hon. Member for Sheffield, Central (Mr. Caborn) might, so perhaps I should say that most of us would not be re-elected—unless we made a real attempt to engage with real electors at local level. I hope that we can have a promise to look more carefully at how these consultations will take place, so that they engage and include real people.
My criticism of the hon. Lady’s speech on the amendment was the number of times she referred to real people as though they had to be educated to give the right answer before those who were undertaking the consultation should take any notice of it. She said that she wanted the consulting organisation to ensure that the people involved were enabled to make “informed decisions”. She wanted to be sure that
“it is not only popular projects that receive money”.
She said that
“there can be a danger, when involving the public more, that main, popular causes will always win.”
I am sure that the hon. Lady would not regard this as a disparaging remark, but she is, in fact, a typical Liberal Democrat, who believes that the public is right when they say what the Liberal Democrats want them to say. Her hon. Friend, the hon. Member for Bath (Mr. Foster) said on Second Reading that:
“we need to be careful when we talk about public involvement in decisions. I certainly welcome the Big Lottery Fund’s statement, in which it pointed out that when the public are involved, they will not be
‘asked to choose between projects where there is a large imbalance in their levels of popularity.’—[Official Report, 14 June 2005; Vol. 435, c 186.]
That is contempt for the public and their views. It is not public consultation. That quote illustrates that perfectly, and I have many more from the Liberal Democrats, which I will not use. I hope that the Minister does not share that contempt for the public, and I am sure that he does not. I hope that in accepting or in rejecting the amendment he will undertake to ensure that real people—those who play the lottery—are closely involved and engaged in how the lottery money is spent. I do not happen to believe that that is why they play it; like my hon. Friend the Member for East Devon (Mr. Swire), I believe that they play for a combination of a meagre expectation of winning and a good deal of enjoyment. The public deserve to be consulted better than they have been until now.

Richard Caborn: I think that this debate is covering clause 11, because, again, we have gone to great lengths to ensure that we will engage the public. I have no doubt that when we come to discuss that clause I will be able answer more fully the comments made by the hon. Lady and by the hon. Gentleman. The general public get it wrong from time to time. On the “Restoration” programme they did not vote for Sheffield manor lodge, known as the castle, in my constituency, and Manchester got the money. That goes to show that occasionally, they get it wrong, although we probably did not put enough votes in.
The amendment would insert a requirement that before making any distribution decision lottery distributors would have to consult the Secretary of State, not-for-profit bodies and, where appropriate, the relevant devolved Administration. That would impose a new layer of control on lottery distributors and would go against the principle that I have been trying to put forward that makes their funding decisions independent of Government. We lay down the policy, but they make the decisions independently, and the amendment seeks more powers over them. It would also serve to increase the time taken for distributors to make grants. That would militate against bringing the balances down. It is not something we want to see.
The measures in the Bill are designed to help lottery money go more quickly and efficiently to good cause projects and to reduce unspent balances. Distributors already consult widely and, where appropriate, that includes in the voluntary and community sector. We already have policy directions to set the overall framework and, where relevant, devolved Administrations issue them with the agreement of the Secretary of State. Distributors also set out their distribution policies in their annual reports and other documents.
Should we need more information, section 25C of the National Lottery etc. Act 1993 already allows us to require strategic plans from distributors if appropriate. Distributors are required to consult before adopting strategic plans and the Secretary of State is required to lay any such plans before Parliament. For these reasons, I ask the hon. Lady to withdraw her amendment.

Jo Swinson: The issues are important. The amendment refers in particular to the voluntary sector organisations and governing bodies that are to be consulted, which is why my remarks were in that vein. I did not mean to show contempt in any way towards the public. The consultation with the public will be dealt with in other parts of the Bill, and I think that the hon. Member for Isle of Wight expressed an unfair characterisation of my comments and sentiments. I believe that the amendment gets it right, because it asks for a consultation with the Secretary of State and various bodies rather than direction or prescription, which is what we see in other clauses. That is the vein in which we should ensure that the relationship works, but on the basis that the Minister will consider the issues in future, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 10 ordered to stand part of the Bill.
Further consideration adjourned.—[Claire Ward.]

Adjourned accordingly at twenty-three minutes to Four o’clock till Tuesday 1 November at half-past Ten o’clock.